In 2016, Buyers will have to search more carefully to find an affordable property that will prove to be a solid investment. According to the latest data, the property market in London is active, but down in volume. Property commentators agree that some of the reasons for the downturn are the changes to Stamp Duty tax introduced by the Government in December 2014 and more recently in the Autumn statement on 25 November 2015.

A further reason is the slowdown in the Chinese economy and the sanctions on Russia, which have impacted on the property market, especially in the residential areas of the capital favoured by international investors. Changes to the Stamp Duty rates for Buy to Let properties and second homes, which come into force in April 2016, may also deter potential landlord investors. Many eyes will be on interest rates. People become used to low interest rates and cheap loans. The current low interest rate will have to rise at some point. Borrowers will find it hard going when interest rates rise. Landlord investors should prepare for the rise in interest rates.

The property market is generally expected to be value - driven in 2016. If prices are reasonable, properties will sell. And the reasonably-priced properties are the ones to look at when investing.

Good property investment in 2016 will require in-depth research. Things to consider would include the location of the property, the property type, and, if you are one of the lucky ones with money to spare, your budget. It is essential to look at the areas that are benefitting from infrastructure improvements and large investments, including regeneration zones and surrounding areas.

London is booming with new regeneration projects, transport infrastructure investment, and new shifts in employment and culture that are creating new property hotspots, buying opportunities and increasing demand for properties.

Transport improvements

Rail

The transport infrastructure improvements will revitalise many previously unpopular areas and will influence local property prices. It is worth doing the research and locating those parts of London where these developments are taking place. Crossrail is a good example of a transport improvement with long-term potential as it will make many areas more accessible, influencing property prices. Prices along the west-east Reading to Shenfield route are rising spectacularly, ahead of the line opening in 2018. Prices in Ealing have already jumped significantly. It is also worth looking at Southall, where a new Crossrail station is under construction. If you want to buy here for investment purposes, it is worth knowing that property prices look set to rise with better transport links.

Crossrail 2 - a proposed new railway serving London and the wider South East, will connect the National Rail networks in Surrey and Hertfordshire via new tunnels and stations between Wimbledon, Tottenham Hale and New Southgate, linking in with the London Underground, London Overground, Crossrail 1 and the national and international rail services. Crossrail 2 will support economic regeneration by providing the infrastructure needed to support 200,000 new homes, particularly in East London. The Northern Line underground extension from Kensington to Battersea will open in 2020, making it easier to commute to Battersea and linking Battersea to the other property hotspots in the capital.

River crossings

In December 2015, the Mayor of London, Boris Johnson MP proposed a total of 13 new tunnels and bridges as part of his vision for the future of the capital – this will increase the total number of river crossings between Imperial Wharf and Dartford by more than a third, and the crossings for pedestrian and cyclists by nearly 50%.The majority of these will be built in east London, where the cross-river connections are poor and population growth is highest. Some river crossings are planned from Fulham in the west to Dartford in the east. The Mayor said: “Building a series of new bridges and tunnels across the Thames is essential for the future prosperity of our rapidly-growing city. By creating more links between the north and south of the river, we won't just improve day-to-day travelling across the сapital, we'll unlock areas for development and create thousands of jobs and homes.”

Subject to funding, the new crossings will be progressed across London to be delivered between now and 2050, and will improve the accessibility for many new homes.

Some property hotspots

Property prices in many central areas of the capital have already reached their potential. While the property demand in the capital continues to grow and the shortage of available properties is not expected to be resolved in the near future, properties in highly desirable and well-known areas of the capital will still be of interest to many buyers and property values in these areas will grow.

However, Central London is not expected to bring the highest returns. For maximum returns, it is wise to consider other developing areas further away from the heart of the capital, where the potential for future price growth is significantly higher. Plans for new housing developments and new regeneration and transport schemes open up lots of interesting opportunities for property investment.

Royal Arsenal Riverside - occupying a prime location along the River Thames with a forthcoming Crossrail Station and buzzing retail hub, is one of South East London's most exciting riverside addresses. Riverside walks, developing infrastructure, and considerable financial investment in this area give this project good potential for future growth. For those who want to live here, the area is buzzing with new cafes, bars and restaurants.

Berkley Homes has been selected to transform a disused Parcelforce depot at Stephenson Street, Newham, east London into a big housing development. The development will bring 3,500 new homes, a school, a park and a further boost for the Canning Town area. The first homes are expected to be delivered in Summer 2018.

Woodberry Park in North London just 15 minutes away from the City, offers a new luxury development Woodberry Down, located on the banks of the New River and West and East Reservoirs and overlooking more than 42 acres of tranquil open water. Like many new build projects, Woodberry Down offers a distinctive way of life concept rather than just the property itself: a 24 hour concierge service , a private gym and spa facilities are available to the residents.

In South London, the Elephant and Castle area will benefit from the Bakerloo line extension, planned from Elephant & Castle through south-east London to Beckenham in Kent. The Oval and Stockwell, are also good examples of places to consider. Despite not yet being in the immediate spotlight, they are located next to the regeneration zones of Battersea, Vauxhall and Nine Elms ( the site of London’s hottest property developments) and are benefiting from the ripple effect.

For those classy Mayfair fans or international high-flyers, there is an impressive project completing in 2016 at one of the finest addresses in the capital - 20 Grosvenor Square. It is due to become one of the first fully serviced buildings in the area, with a hotel service and concierge. It is reasonable to assume that the initial return on investment will not be high, however, Mayfair does not get out of date, and it is safe to say that this address will be highly sought-after for generations to come. The Grosvenor project is a unique opportunity for those wishing to own a property at one of the most prestigious addresses in the country. Grosvenor Square address will make your property stand out by giving it a unique selling point.

Year ahead

So where should investors be looking for the best returns in the future? It is worth looking at areas where international investments are not too intense as you will be up against fewer investors. Consider areas occupied by owner-occupiers and long-term tenants . Neighbourhoods with good schools, good parks and open spaces will continue to attract families and tenants even in difficult market conditions.

The market is changing, and 2016 will see further shifts on the investment property scene as new legislation comes into effect and buyers start adopting new strategies to keep their investments profitable.

Property prospects for first-time buyers are expected to become more favourable this year, with the introduction of the new “London Help to Buy” equity loan scheme for Londoners. However, the shortage of affordable properties coupled with the growing demand will continue to pose difficulties for first-time buyers.

Reasonably priced properties will sell. However, it might be more difficult to sell luxury properties especially those in the region of £1 mil+. Property investors need to take a flexible and pragmatic approach – for instance, 4 properties valued at £500,000 in a developing or desirable residential area might be more saleable and have a higher market value in future than one luxury £2 million property in a residential area dominated by international investors.

As in all changing market conditions, there are still lots of opportunities for a good investment. Buyers take heed! Those of you who are brave and take the plunge could look back on 2016 as a golden time. Buyers who missed the market may rue their loss as some buyers did in the aftermath of 2008.

The article is written in general terms and reflects the personal view of its author. Each property investment case is individual, and you are strongly recommended to seek specific advice before taking any action based on the information it contains, or making any property investment decisions. No responsibility can be taken for any loss arising from action taken or refrained from being taken based on this article.